Differential Impact of State-Local Tax Incentives on Small versus Large Firms

摘要

This study examines the several dimensions of the proposition that smallbusinesses are treated unequally by subnational business tax structures. The use of public funds to finance state economic development tax incentives is an important and controversial policy issue. In the debates about the effectiveness of subsides to influence investment location inter-business equity is a recurring theme. Small-size domestic firms protest that tax incentives benefit primarily large multistate corporations. The goals of the analysis are to offer an alternative approach of evaluating the impact of state and local business tax policy on small versus large firms; to focus development agenda; and to illustrate the application of comparative tax burden analysis for the benefit of citizens and government decisionmakers.